Key keywords: Fed interest rate decision, Dow Jones plunge, S&P 500 decline, volatile US stock market, 2024 FOMC policy update, Treasury yield surge, VIX fear index spike U.S. stocks traded sharply lower in a volatile session on Wednesday, shortly after the Federal Reserve announced its latest monetary policy decision that dashed market expectations of aggressive rate cuts through the rest of 2024. The Dow Jones Industrial Average dropped more than 450 points, or 1.3%, in afternoon trading, erasing all gains it notched in the previous two sessions. The S&P 500 fell 1.5%, slipping below the key 5,400 level, while the tech-heavy Nasdaq Composite slumped 1.8%, led by losses in mega-cap growth names including Apple, Microsoft and Nvidia, each of which traded down between 1.7% and 2.4%. The Federal Open Market Committee (FOMC) voted unanimously to hold the benchmark federal funds rate steady at a 22-year high of 5.25% to 5.5%, a move that was widely expected by market participants. However, the central bank’s updated quarterly dot plot, which outlines officials’ rate outlook, showed policymakers now only expect one 25-basis-point rate cut in 2024, down from the three cuts projected in their June estimate. Half of the 19 FOMC members even signaled they see no rate cuts at all this year, citing slower-than-expected progress in bringing inflation back down to the Fed’s 2% target and continued strength in the U.S. labor market. Fed Chair Jerome Powell reiterated in his post-meeting press conference that the central bank is in no rush to cut rates, noting that recent inflation readings have come in hotter than anticipated and that policymakers need “more confidence” that price pressures are on a sustained downward path before adjusting policy. The hawkish outlook triggered a sharp sell-off in U.S. Treasury markets, with the 10-year Treasury yield jumping 12 basis points to 4.52%, its highest level since November 2023. Higher bond yields make fixed-income assets more attractive relative to stocks, while also increasing borrowing costs for corporations and consumers, weighing on equity valuations especially for high-growth tech companies that rely on cheap capital to expand. The CBOE Volatility Index (VIX), commonly referred to as Wall Street’s fear gauge, spiked 18% to 19.7, its highest level in three months, as investors rushed to hedge against further market swings in the coming weeks. Market strategists noted that the pullback was largely priced in by many institutional investors in the days leading up to the Fed meeting, but the scale of the hawkish shift still caught many retail traders off guard. Looking ahead, investors will turn their focus to upcoming economic data releases, including August non-farm payrolls due next Friday and the latest consumer price index (CPI) report due the following week, which will offer more clues about the Fed’s next policy move in November.